All Eyes On Nokia To See If Recovery Has Started For Mobile Phone Sales

Analysts are expecting Nokia (NYSE: NOK) to report drastically lower handset sales, revenues and net profits for the first quarter on Thursday, but the more important thing they’ll be looking for is whether Nokia is showing signs of an economic recovery.

Right now, predictions are foggy at best, and it’s easy to see why: Just one quarter ago, Nokia, Motorola (NYSE: MOT), Sony (NYSE: SNE) Ericsson (NSDQ: ERIC) and Palm (NSDQ: PALM) all reported less than stellar results during the busy holiday season. In particular, Nokia reported an across the board free fall — sales dropped 19 percent from a year earlier, while operating profit plunged 80 percent. Two exceptions were Research In Motion, which easily beat expectations and is predicting a strong Q1, and Apple (NSDQ: AAPL) (of course). But those two companies are focused on the high-end smartphone market, which is seeing growth even in these difficult times, whereas Nokia’s bread and butter is the mass market phone.

J.P. Morgan analysts wrote in a note to clients this week: “The handset picture in the first quarter is even more opaque than usual.” It predicts a 20 percent sequential drop in global Q1 phone shipments, which is much worse than the customary 10 percent decline after the holiday season, according to MarketWatch.

The fall in demand is caused by consumers, who are waiting longer to upgrade to a new handset, or buying cheaper models when they do. But BusinessWeek suggests that sales hit bottom in early March and are actually beginning to lift. In fact, the company’s stock price has risen 60 percent since their 2009 low on March. 6. Strategy Analytics’ Neil Mawston said Nokia was quick to slow down production and now has about four-to-six-weeks of handsets on hand. That’s low, which may suggest that supply has actually fallen behind demand.

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